Dangote Cement Plc has reported a profit before tax of N732.537 billion for the financial year ended December 31, 2024, representing a 32.44% year-on-year (YoY) increase from 2023.
According to the annual report and financial statements reviewed by Nairametrics, the company’s full-year revenue surged by 62.16% YoY to N3.581 trillion, driven by strong revenue from Nigeria (57%) from the sale of cement and clinker.
In line with its dividend policy, the Directors have recommended a dividend of N30.00 for the 2024 financial year (same as in 2023). The Board considers this dividend appropriate and aligned with the company’s strategic growth objectives, reinforcing investor confidence and shareholder value.
Key highlights (2024 vs 2023 FY)
- Revenue: N3.581 trillion +62.16% YoY
- Cost of sales: N1.646 trillion +63.54% YoY
- Gross profit: N1.935 trillion +61.00% YoY
- Selling & distribution expenses: N618.664 +69.45% YoY
- Administrative expenses: N220.537 billion +74.29% YoY
- Net foreign exchange loss: N92.105 +31.66%
- Operating profit: N1.152 trillion +56.90% YoY
- Finance income: N168.572 billion +515.11% YoY
- Finance cost: N700.299 billion +125.20% YoY
- Gain on net monetary position: N109.404 billion +8.15% YoY
- Profit after tax: N503.247 billion +10.47% YoY
- Earnings per share: N29.74 +12.35% YoY
- Cash and cash equivalents: N449.831 billion +0.61% YoY
- Total assets: N6.403 trillion +62.57% YoY
- Shareholders’ funds: N2.175 trillion +26.04% YoY
Insights and Analysis
Revenue growth and key drivers: The 62.16% YoY increase in revenue to N3.581 trillion was primarily driven by strong performance across key markets:
- Nigeria: N2.064 trillion (+64% YoY)
- Pan-Africa: N1.4 trillion (+57% YoY)
This indicates that while both segments experienced robust growth, Nigeria remains the dominant revenue contributor, accounting for approximately 58% of total revenue.
Despite the impressive revenue growth, total production capacity remained at 52 million tons, suggesting that the company is operating within its existing infrastructure without major capacity expansions.
Production and sales volume trends
- Production volume: 26.951 million tons (+1.01% YoY)
- Sales volume: 27.708 million tons (+1.57% YoY)
The modest increase in production and sales volumes (both under 2%) suggests that the revenue surge was not volume-driven, but rather influenced by higher pricing, improved product mix, and possibly foreign exchange effects.
- This aligns with the broader trend in the industry, where pricing strategies and currency adjustments significantly impact revenue growth.
- The company may have leveraged higher prices, strategic cost pass-throughs, and efficiency gains to drive top-line expansion.
- The increase in sales volume, albeit modest, suggests that demand remains resilient despite price increases. This is a positive sign, as it indicates the company has pricing flexibility without significantly hurting demand.
The 57% YoY growth in Pan-African revenue shows the company is successfully expanding outside Nigeria.
This diversification helps mitigate risks associated with overreliance on the Nigerian market, especially given macroeconomic uncertainties like inflation and currency fluctuations.
Cost of sales growth and impact on margins
The cost of sales grew faster than revenue, driven by rising raw material costs and high fuel expenses. These two components account for over 67% of the total cost of sales.
Despite this, the gross profit margin remains strong at 54%, indicating that cost of sales consumes about half of the revenue.
Operating performance and expense impact
Selling, distribution, and administrative expenses increased significantly, collectively absorbing 56% of gross profit, leading to a decline in operating profit margin to 32% (3.24% lower than in 2023).
However, the margin of 32% is still solid, reflecting the company’s ability to maintain profitability despite cost pressures.
Finance costs and debt Impact
Finance income surged to N169 billion, supported by gains on the net monetary position. However, this was overshadowed by soaring finance costs of N700.299 billion, mainly due to:
- Interest expense: N448 billion (+210% YoY)
- Foreign exchange loss: N249 billion (+52% YoY)
The high interest expense can be attributed to the 286% increase in net debt, which rose to N2.182 trillion in 2024.
As a result, the interest coverage ratio declined to 2.57x from 5.08x in 2023, indicating a reduced ability to cover interest obligations.
Balance sheet strength and leverage position
The balance sheet expanded significantly, with total assets growing by 62%, while shareholders’ funds also increased.
This resulted in a stable leverage ratio of 2.94x, suggesting a relatively balanced financial position.
However, the asset turnover ratio declined by 0.56%, indicating a reduced efficiency in utilizing assets to generate revenue.
Return on equity and shareholder value
With the declines in asset turnover and net profit margin, return on equity (ROE) fell to 23.14%, despite a marginal increase in leverage.
Nonetheless, ROE remains at a decent level, reflecting sustained profitability.
Share price performance
Retained earnings remain strong at N1.027 trillion, supporting the company’s ability to increase its dividend payout.
However, the Board has declared a dividend of N30 per share for the 2024 financial year, maintaining the same level as in 2023.
How this will impact on share price performance will depend on market sentiment, as the stock has only returned 0.25% YtD as of February 2025.
Investor outlook
- Short-term concerns: Rising debt and finance costs could pressure margins.
- Long-term opportunities: Strong revenue growth, stable margins, and stable and consistent dividend payout.
- Key watch areas: Debt management, cost control, efficiency improvements.
